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this is nightly business report with tyler mathisen and susie gharib, brought to you in part by. street.com, up to the minute news and indepth analysis, we provide objective, independent ratings daily on over 4300 stocks, learn more at the street.com/nbr. december downer, stocks start the new month with a loss. and one prominent voice says he is concerned about the market's lofty level, is he right, and can you still find value? >> cyber cash after a holiday weekend that was not so jolly, retailers hope that shoppers splurge. and the government saying that the healthcare.gov website
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is better. but insurers say big problems still persist, all this for december 2nd, 2013. good evening, the numbers on the first day of trading in december, not the kind of numbers the investors were expecting for the stock market. the dow is now back to the 16,000 market and the s&p index stands at exactly 1800. so why the selloff? some blame it on the down sales which pushed up the major retailers, not even encouraging economic data seem to help, the stronger growth in u.s. manufacturing in october. looking at the closing numbers, dow fell 77, s&p lost about five points. susie, also not helping stocks today, comments from a nobel prize winning economist,
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he says the u.s. stock market is looking bubblicioush, that was not the exact word but it was his message, he sees the world as very vulnerable to bubbles, and not just in stock prices but in property markets, as well. he called the u.s. economy still weak and vulnerable. he says technology and financial sector stocks seem most stretched. he still sees value in energy and health care, so far this year the broad-based s&p 500 index is up more than 26%. well, jim paulson is not buying the bubble talk, saying there is still a lot of upside in the market, jim, nice to have you with us. so tell us why you're not expecting any bubble trouble after a nobel prize winning economist says that things are vulnerable. >> you know, susie, i think the
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primary thing that creates sort of a bubble economy and ultimately a recession is just simply too much confidence about the future. when all the players, consumers, businesses, policy officials, everybody gets really bullish about the future they start to engage in dumb behaviors, they stretch the balance sheets, hire too many people and buy that second summer home and that is the thing that ultimately has to be corrected. and i think that confidence is better today but we're still at confidence levels that are below average by a long-term historic norm, and i think the description i would give is we're more comfortable, maybe, but we're certainly not euphoric, the type of confidence that begets behaviors, that brings about a bubblelicbubblel type risk. >> we have low inflation and
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rising interest rates that really are not at a point where they pose competition for stocks. but you still have an economy that is not growing all that fast. and a market that has. can't you concede that the market may be more vulnerable at these levels to a shock? whether it is something that comes from the outside or from washington or something that we can't foresee than it was a year ago? >> well, i think that is true, tyler, every day the market goes up, it is somewhat more vulnerable than it was at very depressed levels. but something to remember, the market is up from 2009, where it was in 2009 was equally artificial. i mean, it had fallen a lot, not necessarily because of fundamentals, but mainly because of fear. excessive fears about one armagedon, all of them proved false, they didn't occur. so in some sense, the rise in the market just gets us back to a meaningful reality.
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we're up, but i don't think we're extended. we're selling at around 16 times, trailing earnings right now. and market history would suggest that market peaks, the major market peaks are in low 20s. i think we'll continue to have earnings growth over the next few years. and we'll probably have arise further evaluations. it won't be a straight line, indeed, next year, we'll get a correction. we're a long ways from the market which is more vulnerable to a major correction. >> all right, the challenge for investors is finding value in this kind of a market, where can they find value? >> well, i would look -- i would look within this country, first, i would like to be a little tilted offshore, susie, towards the nationinternational markets think the dollar will remain weak favoring the developing markets. here, i kind of like the
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markets, you want to have stuff tied to the economy, we'll continue to get good manufacturing ports. i think we'll have good economic reports. so i like the materials and industrial stocks, kind of the manufacturing sector. i still like the financials here. maybe later in the year if interest rates back up a little bit and we get more pressure on the market then you may want to move your allocation more defensively to the staple stock. >> all right, we'll have as to leave it here, jim, thank you very much for coming on the program. jim paulson. and perhaps the concerns about the market, investors poured money into the equity funds. the data shows that more than $31 billion went into all equity mutual funds and insured traded stock funds, that is the sixth month in a row that the stock flow has out paced bond flows.
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and investors are pouring money into the stocks, they are stingy about the black friday weekend. the national retafederation rep they spent less money than last year, over the four-day weekend it is estimated spending fell. the retailers are counting on on-line sales to significantly boost overall revenues. in fact, ebay was a strong standout. we got a look inside the amazon fulfillment center in arizona, for the expectations and logistics surrounding today. >> reporter: the holiday weekend shopping sprees are not over yet. the national retail federation says 131 million americans will shop on this cyber monday, expected to spend $1.8 billion today. up 13% over last year.
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while impressive growth, the total is small compared to the estimated $57.4 billion spent over the black friday weekend. some forecasters suggest that cyber monday has lost some of the strength as they blur the lines between the stock market and the black friday promotions. nevertheless, it is expected to be one of the cyber monday's and the holiday season's biggest winners, this is what amazon calls the slam line, about the mid-way point in the fulfillment process here at the center in phoenix, arizona, now amazon has not given us any expectations for cyber monday, but we know in 2012 more than 306 items were ordered per second around the world. >> these buildings have been really full. we have so much product in them right now. this is the fullest i have ever seen them. and it is -- we're ready for what we believe is going to be a really big season. >> amazon is not the only
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beneficiary of the surge in on-line shopping. fedex says for the first time in its history, today, cyber monday will not only be its busiest day of the season, but its busiest day ever. as they ship orders and they begin to enter the system. just another sign that the rules of the game are changing, with many shopping from their phones, we may not talk about cyber monday as much next year. and united health care projecting revenues in 2014 will be below analysts expectations. they are citing planned reductions and government funding for medicare advantage and other parts of the affordable care act that it says will hit its earnings next year. meanwhile, the obama administration met its
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self-imposed deadline to have the government website back on track and running smoothly for the vast majority of users next month, but despite that, there are numbers still plaguing the use a useers. >> reporter: jakim says it has been a lot easier to enroll people for the health care insurance than last month. >> a couple of weeks ago you couldn't do anything. >> reporter: last week he was able to help people apply and shop all in one sitting. >> people came in, and in half an hour, they found insurance. >> reporter: not so today. although the obama administration says it more than doubled the capacity of the insurance marketplace to handle 50,000 users at a time, after five weeks of trouble shooting. by late are morning, more than 375,000 people had gone into the site, landing in a virtual waiting room that holds their
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place in an on-line queue. but if the front end remains slow, the insurers say the big problem is the back end of the marketplace, the actual planned enrollment system continues to generate faulty information. >> the health care plans are receiving enrollment files that have problems, including missing or inaccurate information. and in some cases, they are not receiving the health care files at all. >> reporter: in many cases, they have to enroll them by hand. >> having the complete enrollment information is essential for coverage to be able to begin on january first. >> reporter: the state and federal exchange have generated more than 230,000 confirmed elections through november 30th. insurers already back logged trying to process the applications, worrying that they won't be able to handle the new surge and get them processed in time for coverage to begin january first. the insurers say they have now
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fixed the major flaws with the insurance files on healthcare.gov. and they expect that now the process will go more smoothly. they will certainly be put to the test in the days to come. bertha coombs, nightly business reform. and could projected reforms in mexico open up new lucrative opportunities for american companies. but first, a look at international markets today. the supreme court has declined to get involved in the problems between states and on-line retailers about the collections for sales taxes. in a big review, the high court
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will not review the suit brought by amazon.com and overstock.com. which urges that by wednesday they have the requirement to collect sales taxes even though the sellers are not located in those states. and meanwhile, amazon.com and founder revealed in a 60 minutes interview revealed the biggest retailer is working on a drone delivery service that he says could be up and running in five years. more on the jetson's like idea, and the hurdles it faces. amon, could this plan ever really get off the ground? >> i see what you did there, tyler, look, these things will not fly an inch if the faa doesn't say they can do it. and right now, there is just not the regulatory infrastructure in place to allow a swarm of drones flying over residential and commercial areas of the united
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states. it is just not possible. but congress has told them to get ready for it and to have the regulations in place by 2015. a lot of experts say the faa will not likely hit the deadline, it will take time to work this all out. among all the things the faa has to think about are how all the drones flying over the areas in the united states would interact with regular aviation and piloted aircraft of the old fashioned kind. can they speak to each other? will the drones get in the way? how will they set up the air space around the airports and the like, there are many issues to deal with it. >> and a lot of things at issue, the people reacting on the streets with these issues, is jeff basos the first to come up with the idea? or is anyone else doing anything like this or proposing anything like this? >> well, he is the one doing it with the biggest wow factor in the united states. but interestingly enough, the
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u.s. marines are doing something like that in afghanistan, they're flying supplies to the marines right now. they have had success with the drones flying supplies to pilots without equipment. they have had crashes, though, and the data they have come up with on how it works and in the marine corps, it is something they may want to have a look at. >> my copy of "50 shades of gray" just got taken out by a 747, but we'll keep following it, amon. >> could be a problem, you bet. two big name companies going worldwide, first, hilton, bought by black stone nearly ten years ago, now plans to sell in two weeks, they are expected to raise nearly $2 and a half billion, valuing the company at more than $20 billion. and another company selling
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stocks, arrow mark, the big company that serves lots of stadiums and amusement parks, plans to raise money by the partial sale. the partial sale means that rare row mark would have a partial stock of $3.4 billion. and plans to cut costs by the year 2016, buying back more stock. that is where we begin tonight's market focus, the drug maker says they will down size the staff to save money and buy back at least $400 million in stock to boost shareholder returns, they are facing patent expirations will also buy the schizophrenia drug. hedge fund star board value is taking aim at the semiconductor, they hold one of the largest stakes and is demanding the company make changes because the stock is deeply under-valued.
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in a letter to the company, star board is demanding a new letter to the directors. talisman energy adding two directors to its board, backed by carl icahn. he now owns nearly 7 and a half percent, the shares climbed to $20.20. dow chemical to sell off part of its commodities. the move would mean unloading about 30 manufacturing plants. the changes will affect almost 2,000 workers. dow says it expects the re-vamp to go through in the next two years, dow stock jumped to almost $40 a share. and company's rating dropped from equal weight to under weight. morgan stanley likes it, but not as much as the peers.
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shares went to $127.68. comcast testing technology that puts more commercials into on-demand tv shows. they help to generate revenue off the old shows that viewers watch. comcast is the parent of cnbc. the share's were down one and a half percent to 12.41%. and inflight go-go receiving go-go ahead, installing the technology on boeing 747 aircraft. they plan to have internet access on the plane by the first quarter of next year. the news sent shares flying up to $31.31. and investors soured on shares of krispy kreme ahead of the company's earnings reports. then when the report came out they sold even more, the company's forecast for the
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upcoming fiscal year was not as light and fluffy as the investors hoped. the stock ended the regular session down more than 3% to $24.55. and mexico is getting closer to amending its constitution to allow foreign investment in the nation's oil industry, that would be for the first time in 75 years. and as michelle cabrera tells us, it would provide new opportunities for u.s.-based oil companies. >> reporter: there is only one oil and gas company in mexico. it has been that way since 1938. in the middle of a socialist revolution, the company kicked out all foreign oil companies and the government took control of the production. for decades, they were one of the top producers, but not anymore. down from 3 and a half million barrels s a day in 2004, to le
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now. the spokesperson said the key to a turn around, accessing the oil in the deep gulf of mexico. deep water drilling is very expensive. just renting a platform costs up to half a million dollars as a day. they spent more than 20 billion, however, they think they need $60 billion. the problem is, they don't have that kind of money. >> reporter: so the mexican president is pushing for reform which finally would allow foreign investment. the debate is expected to begin this week on just how far the reform reforms will go. the more generous they are to foreign companies, the more investment they will get, but they will also be more controversial. for nightly business report, michelle cabrera. and coming up on the program, 12 years after enron's collapse, why is one accounting professor saying the company may
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not have been the house of cards after all. and first a look at the treasury numberings. bank of america settling claims related to a decade's worth of bad mortgage loans it sold to freddie mac. they agreed to pay $400 million to the government-run mortgage giant, resolving all claims for defective loans that freddie mac said the bank knew would go back. and 20 years ago, enron file food bankruptcy. the spectacular collapse inspired movies and sweeping regulatory reforms, but what if the world got the sweeping reform wrong, and enron could
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have been saved. >> reporter: enron was the wall street darling at the start of 2001, which is why its plunge into bankruptcy that year was such a scandal. >> i would say you were a carnival barker, except that wouldn't be fair to carnival barkers. >> reporter: there were congressional demands for reform. 31 people were charged, including the chairman, the chief financial officer, as well. the story that came out, enron was a house of cards, propped up by cheap tricks. but a month before, the enron shares hit a high mark. the day it filed for bankruptcy, it still had $2 billion in cash, and the one who served prison time said enron didn't have to go bankrupt. he placed a series of decisions
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in october of 2001 but didn't say what they were. the lawrence professor says he thinks he know. >> did enron have viable profitable businesses? the answer is yes. if they had had been able to maintain those businesses, certainly the profitable ones, then they could have survived. >> reporter: in a blog post, white says while there were misrepresentations of the company, the stock price miscalculation caused the collapse, he said enron could have been saved, because they allowed the company to compensate investors by issuing stock. >> fastau himself in comments on the blog claims he and lay had a heated argument over the very issue, fastau warning if lay refused to issue stock it would kill the company. lay blamed fastau for the
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collapse, but never fully decided how he would move. he died, taking one of the great mysteries about enron to his grave. and that is nightly business report for tonight. we want to remind you this is the type of year your public television station seeks your report to make one like this one possible. >> and i'm tyler mathisen, thank you for your support, we'll see you right back here tomorrow night. nightly business report has been brought to you in part by. >> street.com, up to the minute news and indepth analysis, we provide objective, independent ratings daily on over 400 ratings daily on over 400 stocks, learn more at the
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Nightly Business Report
PBS December 2, 2013 7:00pm-7:31pm PST

News/Business. Susie Gharib, Tyler Mathisen. (2013) New. (CC) (Stereo)

TOPIC FREQUENCY Enron 10, Us 4, U.s. 4, Mexico 3, Susie 3, Faa 3, United States 3, Arizona 2, Jim 2, Jim Paulson 2, Amon 2, Obama Administration 2, S&p 2, Fastau 2, Tyler Mathisen 2, Michelle Cabrera 2, Tyler 2, Barker 1, Jakim 1, Carl Icahn 1
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